Lessons Learned from Writing and Reviewing SBIR and STTR Federal

Research Grants

Betsy M. Ohlsson-Wilhelm, PhD, CEO SciGro, Inc., NorthEast Office 485 Massachusetts Ave., Suite 300 Cambridge, MA 02139 Cell: 1-617-791-4224 E-mail: bmow@scigro.com

4 September 2014 Venture Cafe

1 Minute Summary

• In the beginning….should you apply? • What do reviewers do? • If you failed….understanding why (also useful

to think about BEFORE you submit) • Second chances… • Jackpot!

SBIR/STTR Project Goal: Reduce Risk!

Stage of Development

Sources

of Capital

FFF (friends, family and founders)

Uncle Sam: SBIRs, STTRs, RC3s,U01s, U44s, other special programs

State/Regional Economic Development Programs

Corporate Partners/Licensees

Public markets (IPO and beyond)

Bank or SBIC loan, cash from early sales

Venture Capital (incl. corporate)

COMPANY Startup/Seed Early stage Expansion Stage Later stage PRODUCT Discovery Preclinical Development Clinical Development Market Entry

Angel Investors

Foundations

Total $ invested

Technical and business risk

Founder ownership/equity Total value created

Focus!

• What product or service will the company offer? • What will differentiate it from the competition? • What innovation(s) will be required for commercial

success? • To whom will the company sell it? • When is this going to happen? REALITY CHECK: does SBIR project timing fit with business plan?

If you can’t answer these questions, consider an RO1 to do basic research. Companies can submit RO1’s, but their success rates are low and the output of the R01 frequently does not generate the kind of information sought by corporate partners.

Is an Academic Inventor Involved? Possible Roles in Translational Research

• Within a research institution – Company Founder – Scientific Advisory Board Member – Consultant – Contractor – Recipient of Sponsored Research

• Within a company – Entrepreneur (focus = fund-raising; not usually a good

match) – Chief Scientific Officer (focus = innovation,

applied/developmental science)

• Contact PI on an SBIR (must be >50% employee during project)

• Collaborator and non-contact PI on a multiple PI SBIR

• Collaborator and contact PI on STTR • Consultant • Subcontractor (if their institution allows it)

Is an Academic Inventor Involved? Possible Roles on Small Business Grants

What kind of technology do you have?

• Are you working on a platform technology? • Where are you in your product development

plan (PDP)? • How will the government view your

technology readiness? (They have boxes for everything…) And what will they expect?

• What kind of progress can you make with SBIR $$?

• Go/No Go A to Go/No-Go B? Later in the PDP?

Is Uncle Sam the Right Investor?

• Typical angel or VC wants to hear – Little/no risk/problems – Only $$ required for success

• Uncle Sam won’t pay unless SB – Identifies the technical barrier preventing

commercialization – Describes innovative research that it will perform

to overcome that barrier – Defines what will be measured and how good it

must be to prove that the barrier has been overcome

Choose the right agency

• Platform Technology – Can be used to create an impressive business plan – INAPPROPRIATE for NIH SBIR/STTR applications – PREFERRED for NSF SBIR/STTR applications

• Individual Product or Service – PREFERRED for NIH SBIR/STTR applications – Focus: data needed to advance product/service toward the

market, and methods employed to collect those data (innovative research!)

For investigator-defined projects: target funding agencies with missions and interests relevant to the proposed product

For agency-defined projects: respond to program needs – especially true for DoD (has a significant number of life sciences related needs)

Talk (and Listen) to Funding Agency(ies)

• Have you been scooped? Search keywords on – http://projectreporter.nih.gov/reporter.cfm (NIH) – https://www.fastlane.nsf.gov/a6/A6Start.htm (NSF)

• Check interest areas (see agency websites for details) • E-mail and/or telephone conversations with target

agencies are highly recommended – but be well prepared and don’t waste their time

• Check for relevant special programs on agency websites and in discussion with program officials

• For NIH, request multi-institute assignments in your cover letter to maximize likelihood of funding

What’s the Intellectual Property Status?

• Is the required IP available? Protected? • Is 3rd party IP needed (freedom to operate?) • DO NOT submit a grant application unless/until you have

filed at least a provisional patent • Are licensor and collaborator IP issues defined?

• Inventorship and ownership/control of new IP developed or reduced to practice (see Model STTR Agreement on NIH website)

• Responsibility for filing and supporting new IP • Time for review before public disclosure and/or publication • If you are licensing IP, INSIST that the patent be filed before

you submit the grant

Reality Check: Cash vs. Cash Flow? Cash • The goal of the Phase I grant ($150K - $225K over 6 - 12 mos) is to get

Phase II funding ($1M – $1.5M over 2-3 yrs) • Writing successful grants takes 150 – 450 hours • SBIR funding never covers the entire project cost, especially in Phase I!

Cash Flow • ≥6 months from submission to earliest funding date (more typically 9-

12 months; even longer with resubmissions) • ≥6 month gap between end of Phase I and funding for Phase II

(Exceptions: extended Phase I with success criteria met in Year 1; FastTrack award; Phase “IA” or other gap funding award)

BEFORE You Start Writing: Final Reality Check • Good match with company strategy and timeline? • Commercial potential: Marketable product or service? • Clear commercialization strategy; competitive advantages

to drive acceptance by relevant market segment? • Credible PI (& collaborators) with required expertise? • Facilities, equipment, resources, established methods? • Finances: adequacy of proposed budget • Can describe technology/proposed research strategy

without compromising IP/competitive position • Enough time/resources to prepare competitive proposal? • Good match with interests of target agency?

Adapted from a presentation by N.S. Rudolph

• Don’t wait until the last minute! • Start by registering (can take 3-6 wks) • Allocate 2 full weeks for first complete draft • Write it at least 2 mos before the deadline. • An average Phase I takes at least 150 hours to

complete (even if you already have a detailed plan). • Give the full draft to some really anal(ytical) folks and

get back their comments • Get reads from both experts and non-experts • Incorporate/rewrite based on their comments

Words to the Wise

Put On Your Reviewer Hat (and Get at Least One “Outsider” to Do the Same)

GOAL Clear and compelling presentation intelligible to a BIMODAL AUDIENCE!! • Teach non-experts enough to understand that the

problem is important and your approach is valid • Sell the experts on your understanding of the field,

the appropriateness of your scientific plan of attack, and your team’s competence to carry out the plan

The Review

• Process is different for each agency • Many items in common • Timing is different

Common Ingredients of Successful Applications

• Eligible, well-qualified small business • Innovative approach to a commercial problem • Proposed product/service with high market

potential • Research strategy with high technical merit

and objective, quantifiable feasibility criteria/measures of success

• Novel hypothesis and/or significant need being addressed

Common Ingredients of Successful Applications - 2

• Program goals matched to target funding agency • Focused work plan compatible with budget and

timelines for the program • Clearly defined rationale for scientific goals • Clearly defined experimental strategy and

endpoints • Propose clear objective, quantitative

measurements demonstrating advance from Go/No Go point A to Go/No Go point B

Review Criteria - NIH PHASE I • Significance: Important problem? Substantial commercial potential? • Investigator(s): PI and team with appropriate expertise and

experience? • Innovation: Novel concepts/approaches? Original/Innovative Aims? • Approach: Design and methods well-developed and appropriate?

Potential problems identified/addressed? Clear statement of technical barrier preventing progress toward commercialization and objective metrics to demonstrate that the barrier has been overcome (FEASIBILITY) • Environment: All necessary facilities and equipment available?

Scientific environment that contributes to the probability of success? ⇒Overall Impact: Strengths/Weaknesses? Sustained impact?

PHASE II All of the above + Phase I feasibility criteria met? Credible Commercialization plan? Letter(s) of support from potential commercialization partners

Review Criteria - NSF • Intellectual Merit

1. Sound approach to establish technical & commercial feasibility? 2. Suggests and develops unique or ingenious concepts or applications? 3. Well qualified technical team? 4. Sufficient access to resources? 5. Reflects state-of-the-art? Advancements in state-of the-art likely?

• Broader Impacts 1. Commercial and societal benefits? 2. Marketable product or process relevant to NSF mission? 3. Team with appropriate balance of technical and business skills? 4. Prior commercialization success? 5. Competitive advantage vs. alternatives that address same market needs? 6. Enabling technologies for further innovation? 7. Likelihood of attracting further non-SBIR funding?

• Commercialization Plan Company’s strategic vision? Market opportunity? Company/team? Product features

and benefits compared to the competition? Financing and revenue model?

Adapted from a presentation by Ruth Shuman (NSF)

• Lack of new or original ideas • Ignorance of relevant published work • Absence of an acceptable scientific rationale • Diffuse, superficial, or unfocused research plan • Questionable reasoning in experimental

approach • Lack of experience in the essential methodology • Lack of sufficient experimental detail • Unrealistically large amount of work

Common Reasons for Poor Scores

Common Reasons for Poor Scores - 2 • Lack of clear objectives, endpoints, criteria for

success • Inadequate statistical analysis • Uncritical experimental approach, no discussion

of potential pitfalls/ alternatives • Uncertainty concerning future directions • Poor case for commercial potential or societal

impact • Failure to follow directions • Assigned to the wrong institute or study section

XYZs of Reviewerese

• Summary statement says X • Reviewer probably said Y during the meeting • You should do Z

Translations: Significance

• X: “Low commercial potential” • Possible Y’s:

– I haven’t a clue what these folks are trying to make

– Nobody in his right mind would buy this – This is just a way for Dr. Consultant to get another

postdoc, piece of equipment etc – This would be great for the three people in the

world who have the syndrome • Z: Clarify how your proposed product will reduce

pain and suffering of the US populace. Societal significance/impact can outweigh lack of innovation!

Translations: Innovation

• X: “Low level of OR no innovation” • Y: This is one of the dullest things I have ever

read. There isn’t a new idea anywhere. • Z: Clarify why it is innovative OR clarify why it

has high societal import

Translations: Approach • X: Most common concern is lack of an objectively

measurable feasibility statement or measure of success for the Phase I workplan

• Y: Generally as stated • Z: Address each concern by listing it in the one page

introduction to the amended application and specifying the pages where you have addressed it in the proposal. Add a statement, e.g. “Feasibility will be demonstrated if at least 300 widgets can be made per hour at a cost of <$0.35/widget with a fail rate less than 1%.”

Translations: Investigator

• X: “Little/no experience in the area” • Y: The proposal sucks! No one who knew

anything about it could have written this. • Z: Rewrite.

– Get outside help! – Adding a consultant to the team may help IF you

assign a specific role/task to the consultant and justify the salary request on the budget justification page.

SciGro’s Advice as of 2Q14 (post-reauthorization)

• Go for an SBIR instead of an STTR (where possible) • Consider an NIH Fast Track if you have clear progression

criteria • Go for an NIH direct to Phase II if you have already

performed work equal to that typically supported by a Phase I

• If not, go for a 1-2 year SBIR Phase I but keep budget to <150% of guideline amount

• Write a feasibility statement that says “Feasibility will be demonstrated if “at least one XYZ can be made/isolated/characterized...”

• Submit a Phase II application at the end of Year 1 of Phase I and keep your team working toward the 2nd (hopefully even better) XYZ while Phase II is under review.

GOOD LUCK!!!

Keep in mind as you write….

“There is no grantsmanship that will turn a bad idea into a good

one, but there are many ways to disguise good one.”

William Raub - Past Deputy Director, NIH